Estimating the Blood Supply Elasticity: Evidence from a Universal Scale Benefit Scheme

TL;DR

This paper estimates how monetary benefits like fee waivers influence blood donation rates in Portugal, finding that subsidies increase donations mainly through repeat donors and that blood drives can substitute monetary incentives.

Contribution

It provides the first empirical estimate of blood donation elasticity to monetary benefits using a natural experiment and instrumental variables approach.

Findings

A 1 euro subsidy increases donations by 1.8% per 10,000 inhabitants.

The benefit mainly encourages repeat donations, not new donors.

Discontinuing the benefit reduces donations by approximately 18%.

Abstract

I estimate the semi-elasticity of blood donations with respect to a monetary benefit, namely the waiver of user fees when using the National Health Service, in Portugal. Using within-county variation over time in the value of the benefitI estimate both the unconditional elasticity, which captures overall response of the market, and the conditional elasticity, which holds constant the number of blood drives. This amounts to fixing a measure of the cost of donation to the blood donor. I instrument for the number of blood drives, which is endogenous, using a variable based on the number of weekend days and the proportion of blood drives on weekends. A one euro increase in the subsidy leads 1.8% more donations per 10000 inhabitants, conditional on the number of blood drives. The unconditional effect is smaller. The benefit does not attract new donors, instead it fosters repeated donation. Furthermore, the discontinuation of the benefit lead to a predicted decrease in donations of around 18%, on average. However, I show that blood drives have the potential to effectively substitute monetary incentives in solving market imbalances.